NLR 123/07 - Income Tax Deduction Regulations under the Income Tax Act, 2000

NEWFOUNDLAND AND LABRADOR REGULATION 123/07 Income Tax Deduction Regulations under the Income Tax Act, 2000 (O.C. 2007-478) Amended by: 18/09 57/09 19/10 15/18 NEWFOUNDLAND AND LABRADOR REGULATION 123/07 Income Tax Deduction Regulations under the Income Tax Act, 2000 (O.C. 2007-478) (Filed December 5, 2007 ) Under the authority of section 68 of the Income Tax Act, 2000 the Lieutenant-Governor in Council makes the following regulations. Dated at St. John's , December 3, 2007 . Gary Norris Clerk of the Executive Council REGULATIONS Analysis 1. Short title 2. Interpretation 3. Deduction and remittances 4. Periodic payments 5. Commissions and salary or wages combined 6. LSVCC shares 7. Bonuses, retroactive increases and lump sum payments 7.1 Disability assistance payment 8. When deductions are not required 9. Variations in deductions 10. Employees' returns 11. Application of other provisions of federal regulations 12. Commencement Schedule A Schedule B Short title 1. These regulations may be cited as the Income Tax Deduction Regulations . 123/07 s1 Back to Top Interpretation 2. (1) In these regulations (a) "Act" means the Income Tax Act, 2000; (b) "appropriate percentage" for a year means the lowest percentage specified in section 7 of the Act that is applicable in determining tax payable under the Act for that year; (c) "employee" means a person receiving remuneration who reports for work at an employer's establishment in the province; (d) "employer" , "estimated deductions" , "pay period" , "remuneration" , and "total remuneration " each has the same meaning as in section 100 of the federal regulations; (e) "federal regulations" means the Income Tax Regulations under subsection 221(1) of the federal Act; (f) "personal credits" means, in respect of a particular taxation year, the greater of (i) the amount referred to in paragraph 9(1)(c) of the Act, and (ii) the sum of the amounts that the employee would be entitled to claim for that year under (A) subsections 9 (1), (2) and (3) of the Act if the description of A in those subsections were read as "is equal to one", (B) section 12 of the Act if the description of A in that section were read as "is equal to one" and as if subsection 118.3(1) of the Federal Act were read without reference to paragraph (c), (C) sections 13 and 14 of the Act if subsection 118.5(1) of the federal Act were read without reference to "an amount equal to the product obtained when the appropriate percentage for the year is multiplied by" and the description of A in subsection 14(1) of the Act were read as "is equal to one", (D) subsection 18(1) of the Act, if the formula A + B - C were read as (A + B) / C where A is the value of A in that subsection, B is the value of B in that subsection, and C is the appropriate percentage for the year, and (E) subsection 18(2) of the Act, if the formula A - B in subsection 18(3) of the Act were read as A / B where A is the value of A in that subsection, and B is the appropriate percentage for the year; and (g) "year" means a calendar year. (2) Amounts expressed in dollars in the Act that are relevant to the definition in this section of "personal credits" and are subject to an annual adjustment under section 6.1 of the Act are subject to the same annual adjustment for the purpose of that definition. (3) For the purpose of these regulations, subsections 100 (3), (3.1) and (4) of the federal regulations applies, with the necessary changes. 123/07 s2 Back to Top Deduction and remittances 3. Every person who makes a payment described in subsection 153(1) of the federal Act, as that section applies for the purpose of the Act, to an employee shall deduct or withhold from that payment, and remit to the Receiver General of Canada , the amount that is determined under these regulations. 123/07 s3 Back to Top Periodic payments 4. (1) Subject to subsection (3) and sections 4 to 8 and to section 109 of the federal regulations, the amount to be deducted or withheld under section 3 of these regulations for a pay period in which the employer makes a payment of remuneration to an employee is determined by the formula A / B where A is the employee's notional tax for the year in which the payment is made, and B is the maximum number of pay periods in that year. (2) For the purpose of this section, (a) an employee's notional tax for the year is the amount determined by the formula (C + D) - E where C is the amount of tax that would be determined under section 6 of the Act for the year if the employee's notional remuneration for that year were the employee's taxable income for the year, D is an amount equal to the amount that would be determined under section 32 of the Act with respect to the employee if the amount that would be the notional tax for the year for the employee were determined without reference to the element D in this formula and that tax were that employee's tax payable under Part I of the Act for that year, and E is the employee's tax credit amount; (b) an employee's notional remuneration for the year is the amount determined by the formula F x G where F is the amount that is the mid-point of the applicable range of remuneration specified in Schedule A for the pay period in which the payment falls, and G is the maximum number of pay periods in that year; and (c) the employee's tax credit amount is the amount determined by the formula H x [I + J + K] where H is the appropriate percentage for the year, I is, (i) where the employee is resident in Canada at the time of the payment, the amount specified in Schedule B as the mid-point of the range of amounts within which the employee's base credit amount falls, and (ii) where the employee is not resident in Canada at the time of the payment, nil, J is the employee's notional remuneration for the year multiplied by the employee's premium rate for the year under the Employment Insurance Act (Canada), not exceeding the maximum amount of the premiums payable by the employee for the year under that Act, and K is the employee's notional remuneration for the year less the amount for that year determined under section 20 of the Canada Pension Plan multiplied by the employee's contribution rate for the year under that Act or under a provincial plan as defined in section 3 of that Act, not exceeding the maximum amount of the contributions payable by the employee for the year under the plan. (3) The amount determined under subsection (1) shall be rounded to the nearest multiple of $0.05, or, where that amount is equidistant from 2 multiples of $0.05, to the higher multiple. 123/07 s4 Back to Top Commissions and salary or wages combined 5. (1) Subject to sections 6 to 9 of these regulations and to section 109 of the federal regulations, where an employee has made an election under section 107(2) of the federal regulations and has not revoked that election, the amount to be deducted or withheld under section 3 of these regulations by the employer from a payment of remuneration to that employee is the amount determined by the formula A x B where A is the amount of the payment, and B is the employee's notional tax rate. (2) For the purpose of this section, (a) an employee's notional tax rate is, subject to subsection (3), the amount determined by the formula C / D where C is the employee's notional tax, and D is the employee's total remuneration for the year; (b) an employee's notional tax is the amount determined by the formula E - F where E is the amount of tax that would be determined under section 7 of the Act for the year if the employee's net notional remuneration for that year were the employee's taxable income for the year, and F is the employee's tax credit amount; (c) an employee's total remuneration for the year is the amount recorded as his or her total remuneration by the employee on the return filed under subsection 107(2) of the federal regulations; (d) an employee's net notional remuneration is the amount determined by the formula D - H where D is the employee's total remuneration for the year, and H is the employee's expenses for the year as recorded by the employee on the return filed under subsection 107(2) of the federal regulations; and (e) an employee's tax credit amount is the amount determined by the formula I x [J + K + L] where I is the appropriate percentage for the year, J is (i) where the employee is resident in Canada at the time of the payment, the employee's base credit amount for the year as recorded by the employee on the return filed under section 10 , and (ii) where the employee is not resident in Canada at the time of the payment, nil, K is the employee's total remuneration for the year multiplied by the employee's premium rate for the year under the Employment Insurance Act (Canada), not exceeding the maximum amount of the premiums payable by the employee for the year under that Act, and L is the employee's total remuneration for the year less the amount for the year determined under section 20 of the Canada Pension Plan multiplied by the employee's contribution rate for the year under that Act or under a provincial plan as defined in section 3 of that Act, not exceeding the maximum amount of the contributions payable by the employee for the year under the plan. (3) For the purpose of this section, the amount determined under paragraph (2)(a) is to be rounded to 2 places after the decimal by (a) adding .005 to the first 3 digits after the decimal; and (b) dropping the third digit from the total obtained under paragraph (a). 123/07 s5 Back to Top LSVCC shares 6. Where, in a taxation year, an employer deducts from a payment of remuneration to an employee an amount for the acquisition by the employee of a share which would entitle the employee to a deduction for that year under section 45.1 of the Act, there shall be deducted from the amount determined under paragraph 4(2)(a) or 5(2)(b) in respect of that payment the lesser of (a) 15% of the amount deducted for the acquisition of the share; and (b) $750. 123/07 s6 Back to Top Bonuses, retroactive increases and lump sum payments 7. (1) Where, in a taxation year, a payment for a bonus or retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer, including the bonus or retroactive increase, may reasonably be expected not to exceed $5,000 in that year, the amount to be deducted or withheld under section 3 by the employer from the payment is 5% of the payment. (2) Where a payment for a bonus is made by an employer to an employee whose total remuneration from the employer, including the bonus, may reasonably be expected to exceed $5,000 in the taxation year of the employee in which the payment is made, the amount to be deducted or withheld under section 3 by the employer from the payment is the amount determined by the formula A x (B – C) where A is the number of pay periods in the taxation year of the employee in which the payment is made, and B is the amount determined under section 4 for an assumed remuneration equal to the sum of (a) the amount of regular remuneration paid by the employer to the employee in the pay period in which the bonus payment is made; and (b) an amount equal to the bonus payment divided by the number of pay periods in that year, and C is the amount determined under section 4 in respect of the amount of regular remuneration paid by the employer to the employee in the pay period in which the payment is made. (3) Where a payment for a retroactive increase in remuneration is made by an employer to an employee whose total remuneration from the employer, including the retroactive increase, may reasonably be expected to exceed $5,000 in the taxation year, the amount to be deducted or withheld under section 3 by the employer from the payment is the amount determined by the formula D x (E – F) where D is the number of pay periods for which the increase in remuneration is retroactive, E is the amount determined under section 4 for the new rate of remuneration, and F is the amount determined under section 4 for the previous rate of remuneration. (4) Subject to subsection (5), where a lump sum payment, as defined in subsection 103(6) of the federal regulations, is made by an employer to an employee who is a resident in Canada , the amount to be deducted or withheld under section 3 of these regulations by the employer from the payment is as follows: (a) 3% of the payment, where the payment does not exceed $5,000; (b) 7% of the payment, where the payment exceeds $5,000 but does not exceed $15,000; (c) 10% of the payment, where the payment exceeds $15,000. (5) Where the lump sum payment referred to in subsection (4) would be pension income or qualified pension income of the employee to which section 9(3) of the Act would apply if the definition "pension income" in subsection 118(7) of the federal Act were read without reference to subparagraphs (a)(ii) and (iii) of that definition, the payment is considered to be the amount of the payment minus (a) where the payment does not exceed the amount taxable referred to in paragraph 7(1)(a) of the Act, as adjusted annually under section 6.1 of the Act, the lesser of $1,000 and the amount of the payment; (b) where the payment exceeds the amount referred to in paragraph (a) but does not exceed $59,772, the amount determined by the formula $1,000 x (A / B) where A is the appropriate percentage, and B is the percentage in paragraph 8(3)(b) of the Act that is applicable in determining tax payable under the Act for the year in which the payment is made; and (c) where the payment exceeds $59,772, the amount determined by the formula $1,000 x (A / B) where A is the appropriate percentage, and B is the percentage in paragraph 8(3)(c) of the Act that is applicable in determining tax payable under the Act for the year in which the payment is made. (6) An amount that (a) is expressed in dollars in subsection (5); and (b) is the same as an amount in section 7 of the Act that is subject to adjustment under section 6.1 of the Act, is subject to the same annual adjustment for the purpose of subsection (5). (7) For the purpose of paragraphs (5)(b) and (c), the amount determined by the formula shall be rounded to the nearest multiple of one dollar, or, where that amount is equidistant from 2 of those multiples, to the higher multiple. 123/07 s7 Back to Top Disability assistance payment 7.1 (1) If an employer makes a disability assistance payment under a registered disability savings plan to an employee who is a resident of Canada, the employer shall deduct or withhold from the payment, if an amount is required to be deducted or withheld under subsection 103.1(2) of the federal regulations, an amount determined by the formula (A-B) x C Where A is the amount used in the formula in subsection 103.1(2) of the federal regulations for A B is the amount used in the formula in subsection 103.1(2) of the federal regulations for B C is (i) 3% of the amount paid, where the plan payment does not exceed $5,000, (ii) 7% of the amount paid, where the plan payment exceeds $5,000 but does not exceed $15,000, and (iii) 10% of the amount paid, where the plan payment exceeds $15,000. (2) For the purposes of the description of C in subsection (1), plan payment means plan payment as defined in subsection 103.1(1) of the federal regulations. 15/18 s1 Back to Top When deductions are not required 8. An amount is not required to be deducted or withheld under these regulations from a payment in respect of an employee who was neither employed nor resident in Canada at the time of the payment, except for (a) remuneration described in subparagraph 115(2)(e)(i) of the federal Act that is paid to a non-resident person who has in the year in which the payment is made, or who had in a previous year, ceased to be a resident in Canada; or (b) remuneration reasonably attributable to the duties of an office or employment performed or to be performed in Canada by the non-resident person. 123/07 s8 Back to Top Variations in deductions 9. (1) Where an employer makes a payment of remuneration to an employee in his or her taxation year (a) for a period for which a provision is not made in Schedule A; or (b) for a pay period referred to in Schedule A, and the amount of the payment is greater than an amount provided for in that schedule for that pay period, the amount to be deducted or withheld under section 3 from the payment of remuneration is the amount determined by the formula A x (B / C) where A is the amount of the payment, B is the tax reasonably expected to be payable under the Act by the employee on the total remuneration reasonably expected to be paid by the employer to the employee for the year in which the payment is made, and C is the total remuneration referred to in the description of B. 123/07 s9 Back to Top Employees' returns 10. T he return required to filed by an employee under subsection 227(2) of the federal Act as it applies for the purpose of these regulations shall be filed by the employee with the employer when the employee begins employment with that employer, and a new return in the same form shall be filed within 7 days after the date of an event that may reasonably be expected to change the employee's personal credits amount for the year. 123/07 s10 Back to Top Application of other provisions of federal regulations 11. (1) The following provisions of the federal regulations apply for the purpose of these regulations: (a) subsection 102 (5), (b) subsections 104 (3), (3.01), (3.1) and (4), (c) section 104.1, (d) subsections 107 (2) and (3), (e) section 108 , (f) section 109 , and (g) subsection 110 (1). (2) Subsections 100 (2) and (5) of the federal regulations do not apply for the purpose of these regulations. 123/07 s11 Back to Top Commencement 12. These regulations are considered to have come into force on January 1, 2007 . 123/07 s12 Back to Top Schedule A 1. For the purpose of the description of F in paragraph 4 (2)(b), from January 1 to December 31, 2017, the ranges of remuneration for each pay period in a taxation year shall be determined as follows: (a) in respect of a daily pay period, the ranges of remuneration commence at $40 and increase in increments of $2 for each range up to and including $147.99; (b) in respect of a weekly pay period, the ranges of remuneration commence at $182 and increase in increments of (i) $2 for each range up to and including $289.99, (ii) $4 for each range from $290 to $509.99, (iii) $8 for each range from $510 to $949.99, (iv) $12 for each range from $950 to $1,609.99, (v) $16 for each range from $1610 to $2,489.99, and (vi) $20 for each range from $2,490 to $3,589.99; (c) in respect of a bi-weekly pay period, the ranges of remuneration commence at $364 and increase in increments of (i) $4 for each range up to and including $579.99, (ii) $8 for each range from $580 to $1,019.99, (iii) $16 for each range from $1,020 to $1,899.99, (iv) $24 for each range from $1,900 to $3,219.99, (v) $32 for each range from $3,220 to $4,979.99, and (vi) $40 for each range from $4,980 to $7,179.99; (d) in respect of a semi-monthly pay period, the ranges of remuneration commence at $394 and increase in increments of (i) $4 for each range up to and including $609.99, (ii) $8 for each range from $610 to $1,049.99, (iii) $18 for each range from $1,050 to $2,039.99, (iv) $26 for each range from $2,040 to $3,469.99, (v) $34 for each range from $3,470 to $5,339.99, and (vi) $44 for each range from $5,340 to $7,759.99; (e) in respect of 12 monthly pay periods, the ranges of remuneration commence at $786 and increase in increments of (i) $8 for each range up to and including $1,217.99, (ii) $18 for each range from $1,218 to $2,207.99, (iii) $34 for each range from $2,208 to $4,077.99, (iv) $52 for each range from $4,078 to $6,937.99, (v) $70 for each range from $6,938 to $10,787.99, and (vi) $86 for each range from $10,788 to $15,517.99; (f) in respect of 10 pay periods a year, the ranges of remuneration commence at $944 and increase in increments of (i) $10 for each range up to and including $1,483.99, (ii) $20 for each range from $1,484 to $2,583.99, (iii) $42 for each range from $2,584 to $4,893.99, (iv) $62 for each range from $4,894 to $8,303.99, (v) $84 for each range from $8,304 to $12,923.99, and (vi) $104 for each range from $12,924 to $18,643.99; (g) in respect of 13 pay periods a year, the ranges of remuneration commence at $726 and increase in increments of (i) $8 for each range up to and including $1,157.99, (ii) $16 for each range from $1,158 to $2,037.99, (iii) $32 for each range from $2,038 to $3,797.99, (iv) $48 for each range from $3,798 to $6,437.99, (v) $64 for each range from $6,438 to $9,957.99, and (vi) $80 for each range from $9,958 to $14,357.99; and (h) in respect of 22 pay periods a year, the ranges of remuneration commence at $429 and increase in increments of (i) $6 for each range up to and including $752.99, (ii) $10 for each range from $753 to $1,302.99, (iii) $18 for each range from $1,303 to $2,292.99, (iv) $28 for each range from $2,293 to $3,832.99, (v) $38 for each range from $3,833 to $5,922.99, and (vi) $48 for each range from $5,923 to $8,562.99. 18/09 s1 ; 57/09 s1 ; 19/10 s1 ; 15/18 s2 Back to Top Schedule B 1. For the purpose of paragraph 4(2)(c), from January 1 to December 31, 2017 the mid-point of each range of base credit amounts listed in the first column of the following table is the amount specified opposite in the second column of the table. Column 1 Column 2 Range of base credit amount Mid-point $0 to $8,978 $8,978.00 From $8,978.01 to $10,917 $9,947.50 From $10,917.01 to $12,856 $11,886.50 From $12,856.01 to $14,795 $13,825.50 From $14,795.01 to $16,734 $15,764.50 From $16,734.01 to $18,673 $17,703.50 From $18,673.01 to $20,612 $19,642.50 From $20,612.01 to $22,551 $21,581.50 From $22,551.01 to $24,490 $23,520.50 From $24,490.01 to $26,429 $25,459.50 for amounts in excess of $26,429 the actual base credit amount 19/10 s2 ; 15/18 s2